Amendments to the BVI Trust Legislation - May 2013
Amendments to the BVI Trust Legislation
To maintain the British Virgin Island’s position as a leading international trust jurisdiction a number of amendments were introduced to BVI trust legislation amending the Trustee Act, Virgin Islands Special Trusts Act (VISTA) and the Trust Corporations (Probate and Administration) Act. We consider the amendments to each act below.
The amendments to the Trustee Act and VISTA came into effect on 16th May 2013. It is intended that the changes will ensure that the BVI remains internationally attractive jurisdiction at the forefront of international trust planning.
Amendments to the Trustee Act
The principal changes to the Trustee Act can be summarised as follows:
Perpetuity period: The applicable perpetuity period in the BVI has been extended by a significant period, from 100 years to 360 years. The change was made as it was considered that the previous 100 years perpetuity period could be too short and restrictive for multi-generational trust structures. The extension of the period will provide greater flexibility for trust planning for trusts created after 15th May 2013.
Private trust company: In an interesting development, the Trustee Act will now include a private trust company (PTC) which is now considered as a ‘designated person’ under the legislation and can act as a trustee. This adds PTC’s to the list of the designated persons which includes BVI lawyers, auditors and BVI trust licence holders. As a result a PTC can now be appointed as the sole trustee of a BVI purpose trust, providing the trust was created on or after 1st March 2004.
Trust Duty: The trust duty payable on the stamping of a chargeable instrument, for example a new trust or the re-domiciliation of a trust to the BVI, has increased from US$100 to US$200. Fines due on the failure to stamp have also increased from US$200 a year to US$400 a year that duty has not been paid. The late stamping fee has also doubled to US$200.
Trustee’s lending: If section 101 of the Trustee Act is stated in a trust deed to apply, a third party lending to a trust was permitted to require the trustee’s powers of investment and distribution be restricted and the appointment and removal trustees, in order to protect the lending. The application of section 101 has been extended to cover not only the loan of money but the loan of any type of assets by a third party to trustees. This will provide useful additional security to lenders.
Amendments to the Virgin Islands Special Trusts Act (VISTA)
The major change to the VISTA legislation now permits a Private Trust Companies (PTC) to be the sole trustee of a VISTA trust. This is a significant change from the earlier legislation under which only an entity with a BVI trust licence could be a sole trustee. It is a particularly notable change, as the VISTA regime removes a trustees’ duty to exercise supervision and, when necessary, intervene in the directors' administration of a BVI company held under the VISTA regime. In a further change, assets currently held in an existing BVI trust can be appointed directly into a VISTA trust.
The principal changes to VISTA:
VISTA Activated and Deactivated: It is now possible for the VISTA declaration to state when the VISTA regime will apply to the trust and also when on the happening of a specified event it will no longer apply, effectively applying an on/off switch to the regime. The power to activate or deactivate VISTA would be vested in an individual or committee but not the trustees.
Conversion to VISTA: Non-VISTA trusts are now permitted to convert to VISTA, providing that they satisfy the requirements of the VISTA legislation and providing one of the trustees is a BVI trust licence holder or a PTC.
As indicated above, a PTC can be a trustee of a VISTA trust and the requirement that there is only one trustee to a VISTA has been removed. From now on at least one VISTA trustees can be a BVI licence holder or a PTC. In addition, an individual or non-BVI company can also be a co-trustee, should multiple trustees be required.
Other changes in brief:
Trustees have rights to inspect certain corporate records and accounts in their capacity as shareholder of the underlying BVI company.
The reduced level of fiduciary responsibility on trustees under the VISTA legislation can be increased with the addition of appropriate provisions in the trust deed.
Trustee can be given greater responsibility by the settlor to ensure that their wishes are being carried out. This amends the office of director rules, to give the trustee power to appoint or remove directors.
Where there are grounds for complaint the ‘appointed enquirer’ can be paid from trust assets and the Trustee has an increased obligation to provide information on the trust and its assets.
The settlor can appoint any individual as an ‘interested person’ and is no longer restricted by VISTA as to who can be appointed. As a result the protector is no longer required to be an interested person under the VISTA legislation.
Trust Corporations (Probate and Administration) Act
The Trust Corporations (Probate and Administration) Act has also been amended to permit the holders of a BVI Class 1 trust licence to be appointed and act in the BVI as the executor and administrator of an estate with BVI situs assets.
The appointment of a BVI executor to a BVI will should expedite the collection and distribution of assets to the beneficiaries. One of our companies Rosebank Limited is the holder of a BVI trust licence and can be appointed to act in such circumstances following the amendment to this legislation.
We consider that these changes are positive and enhance the attractiveness of the BVI VISTA and trust vehicles for international wealth and succession planning.